How to Run Your Payroll Effectively in 5 Steps - Our Guide

Payroll is one of the most tedious tasks a business has to handle. Doing the payroll has become even more difficult in recent years due to various rules and regulations that businesses must comply with. Canadian businesses, in particular, have been struggling to get their payroll affairs in order due to the complexities of the Canadian Revenue Agency’s (CRA) regulations. Nonetheless, carrying out every part of your payroll process effectively—from filing your T4s to hiring and paying your employees—doesn’t have to be complex. Here’s a quick guide on how to make things easier for yourself and your business: 

Step #1: List down all your employees

First and foremost, it is vital to list down every one of your employees that is eligible for payroll to ensure that you can get an accurate figure when running your numbers. Identify the headcount in every department, including HR and accounting. Additionally, it is also best to record and pay yourself as an employee if you’re running your business through a separate business entity (such as a corporation) in order to maintain accuracy in your records. 

Step #2: Gather all the necessary information

Gather all the necessary information from your employees. Here’s what you’re going to need from every person on the list:

1. Personal information such as name, birthday, hire date, address, SIN, etc.
2. Pay amounts for each employee
3. Completed TD1 forms
4. Banking details to pay your employees via direct deposit

Make sure to capture important employment detail for every person in your payroll, such as their compensation, job designation, payable benefits, among other data.

Step #3: Choose the method for how you’ll manage your payroll

With several updates and advancements in accounting software, you can now opt between choosing payroll software to handle your recording tasks and the traditional manual payroll method. Choosing the right method that suits your business’s needs and capabilities will affect how efficient your process can be.

Step #4: Select your payroll frequency

After setting your payroll method in place, you’ll have to decide on the frequency in which it occurs. The two common choices of payroll frequency as bi-weekly payments (or every two weeks) and semi-monthly (or twice every month), depending on how your employees are paid. If you aren’t sure as to what option you should go for, here’s a quick guide on what you should decide on:

1. If you have hourly employees then bi-weekly or weekly payroll is the easiest. This means your team gets paid 26 or 52 times a year, or every week or every other week. You can calculate hours for a two- or one-week period starting Saturday-Friday and then pay employees the following Friday. This is the most common choice because pay dates are always on Friday.
2. If you only have salaried employees then semi-monthly or monthly payroll is the best choice. This means your team gets paid 24 times a year, or twice per month. Employees are paid on the 15th and last day of the month, or the Friday before those dates if they land on a weekend.

Step #5: Register your business payroll

Register your company in order to attain a business number that can be used to register for a payroll account with the CRA. During the payroll account opening process, a CRA agent will request the following information from you:

1. Business name
2. Business number
3. Your personal details
4. Payroll frequency
5. Dollar value of payroll - this helps them determine how often you need to remit source deductions

Setting up an efficient payroll system can be much easier than people expect it to be. By following this quick and easy payroll set-up guide, you can avoid making costly mistakes that may harm your business while keeping your employees satisfied.If you are looking for payroll services in Ontario, get in touch with us to see how we can help.Contact us today for your free assessment to find out how Blueprint Accounting can support your business.